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NEC Corp. (JP:6701)
:6701
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NEC
(6701)
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Rating:75Outperform
Price Target:
¥5,588.00
▲(9.70% Upside)
NEC's strong financial performance and positive technical indicators are the primary drivers of its stock score. However, the high valuation limits the overall attractiveness. The absence of earnings call data and corporate events did not impact the score.
NEC (6701) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
$6.49T
Dividend Yield0.55%
Average Volume (3M)4.22M
Price to Earnings (P/E)31.8
Beta (1Y)1.06
Revenue Growth-0.35%
EPS Growth32.66%
CountryJP
Employees105,276
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)N/A
Shares Outstanding1,364,249,300
10 Day Avg. Volume5,395,680
30 Day Avg. Volume4,216,096
Financial Highlights & Ratios
PEG Ratio1.40
Price to Book (P/B)2.15
Price to Sales (P/S)1.22
P/FCF Ratio19.23
Enterprise Value/Market Cap0.88
Enterprise Value/Revenue1.65
Enterprise Value/Gross Profit5.23
Enterprise Value/Ebitda12.70
Forecast
1Y Price Target
$5,311.21Price Target Upside4.26% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
NEC Business Overview & Revenue Model
Company DescriptionNEC Corporation (6701) is a Japanese multinational IT and electronics company that provides a wide range of technology solutions and services. The company operates primarily in sectors such as telecommunications, public safety, and IT infrastructure. NEC is known for its advanced technologies in areas like artificial intelligence, cloud computing, and networking, offering products and services that include network equipment, software solutions, and systems integration services. Additionally, NEC focuses on social solutions that enhance public safety and contribute to smart city implementations.
How the Company Makes MoneyNEC generates revenue through multiple streams, primarily from the sale of hardware, software, and integrated solutions in the IT and telecommunications sectors. Key revenue sources include network systems, which provide hardware and software for telecommunications operators, and public safety solutions that cater to government contracts. The company also earns income through systems integration, where it designs and implements complex IT systems for enterprises and public organizations. Significant partnerships with telecom operators and government agencies play a crucial role in securing large-scale contracts, contributing to NEC's earnings. Furthermore, the company's investments in R&D enable it to innovate and stay competitive, allowing for potential growth in emerging markets such as AI and cloud services.
NEC Earnings Call Summary
Earnings Call Date:Oct 29, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Feb 02, 2026
Earnings Call Sentiment Neutral
The earnings call highlights several positive outcomes, including record revenue and profit growth, strong performance in IT services, and significant free cash flow increase. However, these are balanced by notable challenges such as losses in the submarine cable business and investment outflows. Thus, the overall sentiment is mixed, with a balance of achievements and challenges.Q4-2025 Updates
Positive Updates
Record Revenue and Profit Growth
Revenue for FY March 2025 was JPY3,423.4 billion, with a non-GAAP operating profit (OP) of JPY311.3 billion, achieving the mid-term management plan's targets a year ahead of schedule. Revenue increased by 5.3% year-on-year, and non-GAAP OP increased by JPY98.9 billion.
Strong Performance in IT Services
International IT business OP increased due to improved profitability, mainly attributable to Avaloq. Domestic IT services revenue excluding NEC facilities increased by 9%, and profitability improved by 2.3%.
Free Cash Flow Increase
Free cash flow from operating activities increased by JPY73.2 billion, leading to a total increase of JPY18 billion year-on-year, driven by an improved cash conversion cycle.
Blue Stellar Revenue Surge
Blue Stellar reported a 44% increase in revenue from the previous year, with a significant improvement in profitability.
Achievement of Mid-term Management Plan Targets
The company achieved its mid-term management plan targets for non-GAAP net profit and EBITDA one year ahead of schedule.
Negative Updates
Submarine Cable Business Loss
The submarine cable business recorded a JPY14 billion loss due to force majeure issues, resulting in project delays and additional costs.
Challenges in Telecom Services
The base station business recorded a negative JPY4.5 billion impact, although there was a positive impact of JPY15 billion due to the absence of one-off losses from the previous year.
Investment Outflows
Cash flow from investment activities was a net outflow of JPY55.1 billion, primarily due to investments to optimize the real estate portfolio.
Ongoing Monitoring of Low-Profit Businesses
A total of 12 businesses exited the low-profit monitoring list, but two new businesses, including the submarine cable business, were added, with decisions pending on remaining businesses.
Company Guidance
In the recent call, the company provided guidance for the fiscal year ending March 2026, projecting revenue of JPY3.36 billion and a non-GAAP operating profit (OP) of JPY320 billion. This represents an increase of JPY20 billion from the mid-term management plan target, despite macroeconomic uncertainties. The adjusted OP is expected to be JPY310 billion, factoring in ongoing structural reforms. The IT services segment is projected to post revenue of JPY2.15 trillion with an adjusted OP of JPY263 billion, while social infrastructure is expected to achieve revenue of JPY1.16 trillion and adjusted OP of JPY100 billion. The company also noted plans to increase investment in growth areas while maintaining a disciplined approach to capital allocation, applying cash ROIC evaluation for M&A transactions. The guidance reflects a continued focus on increasing profitability, even amid challenging conditions, and highlights strategic efforts to enhance operational efficiency and future growth potential.NEC Financial Statement Overview
Summary
NEC demonstrates strong financial performance with robust profitability metrics and efficient operations. The company maintains a healthy balance sheet with moderate leverage and strong cash flow generation. However, recent revenue growth has slightly dipped, and increasing capital expenditures need monitoring.Income Statement
NEC has shown robust performance with improving profitability metrics. The gross profit margin stands at 30.99% for the latest year, indicating efficient cost management. The net profit margin has increased to 5.12%, reflecting a solid bottom line. Revenue growth has been positive over the years, although there was a slight dip in the latest year. Both EBIT and EBITDA margins indicate strong operational efficiency, with an EBIT margin of 8.27% and an EBITDA margin of 12.41%.85
Very Positive
Balance Sheet
The balance sheet of NEC shows a healthy equity base with a debt-to-equity ratio of 0.34, suggesting moderate leverage. The return on equity is 8.97%, demonstrating effective use of equity financing. With an equity ratio of 45.23%, the company maintains a balanced capital structure. However, the increase in total debt over the years warrants cautious monitoring.78
Positive
Cash Flow
NEC's cash flow statement reflects strong cash generation capabilities. The free cash flow has grown consistently, with a free cash flow to net income ratio of 1.24, highlighting robust cash earnings relative to net income. The operating cash flow to net income ratio of 1.97 further underscores healthy cash conversion from operations. The trajectory of free cash flow growth is positive, though capital expenditures have increased, which may impact future free cash flow if not managed.82
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.45T | 3.42T | 3.48T | 3.31T | 3.01T | 2.99T |
| Gross Profit | 1.09T | 1.06T | 1.01T | 958.25B | 886.41B | 861.18B |
| EBITDA | 447.75B | 422.03B | 382.92B | 356.76B | 330.96B | 331.06B |
| Net Income | 200.33B | 175.18B | 149.52B | 114.50B | 141.28B | 149.61B |
Balance Sheet | ||||||
| Total Assets | 3.87T | 4.32T | 4.23T | 4.04T | 3.82T | 3.73T |
| Cash, Cash Equivalents and Short-Term Investments | 526.69B | 584.62B | 476.49B | 419.46B | 430.78B | 523.35B |
| Total Debt | 513.49B | 666.36B | 573.64B | 608.48B | 597.38B | 702.86B |
| Total Liabilities | 1.90T | 2.24T | 2.14T | 2.13T | 2.04T | 2.16T |
| Stockholders Equity | 1.89T | 1.95T | 1.92T | 1.62T | 1.51T | 1.31T |
Cash Flow | ||||||
| Free Cash Flow | 381.19B | 218.00B | 171.46B | 74.41B | 76.41B | 203.97B |
| Operating Cash Flow | 493.73B | 344.41B | 271.23B | 152.13B | 147.52B | 274.91B |
| Investing Cash Flow | -346.91B | -242.17B | -76.02B | -49.59B | -63.38B | -87.49B |
| Financing Cash Flow | -118.42B | 7.03B | -155.51B | -122.79B | -189.62B | -33.61B |
NEC Technical Analysis
Positive
5094.00
Price Trends
4691.72
Positive
4406.64
Positive
3763.72
Positive
Market Momentum
125.25
Negative
60.47
Neutral
83.98
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6701, the sentiment is Positive. The current price of 5094 is above the 20-day moving average (MA) of 4890.00, above the 50-day MA of 4691.72, and above the 200-day MA of 3763.72, indicating a bullish trend. The MACD of 125.25 indicates Negative momentum. The RSI at 60.47 is Neutral, neither overbought nor oversold. The STOCH value of 83.98 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6701.
NEC Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
| ― | $6.49T | 31.79 | 10.52% | 0.55% | -0.35% | 32.66% | |
| ― | ¥1.12T | 21.62 | ― | 1.37% | 4.39% | 7.80% | |
| ― | $6.99T | 17.60 | 11.82% | 0.75% | -8.36% | 45.42% | |
| ― | ¥1.31T | 26.48 | ― | 1.97% | 33.00% | 21.00% | |
| ― | $3.15T | 31.98 | 23.37% | 1.10% | 3.28% | 16.48% | |
| ― | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
| ― | ― | ― | ― | ― | 3.73% | 11.64% |
* Technology Sector Average
JP:6701
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NEC Corporate Events
NEC Corporation to Merge with NEC Patent Service to Strengthen Intellectual Property Strategy
Oct 21, 2025
NEC Corporation has announced a merger with its wholly-owned subsidiary, NEC Patent Service, Ltd., effective April 1, 2026. This strategic move aims to optimize NEC’s intellectual property resources by integrating NEPAS into its Intellectual Property & Rule-Making Division, enhancing its ability to manage patents and analyze competitors’ trends. The merger is expected to streamline operations and reinforce NEC’s market positioning by leveraging intellectual property as a core strategic asset.
The most recent analyst rating on (JP:6701) stock is a Buy with a Yen5740.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.
NEC Restructures Fire and Disaster Prevention Business
Aug 1, 2025
NEC Corporation is restructuring its fire and disaster prevention business through a series of corporate splits involving its wholly-owned subsidiaries. This strategic move aims to strengthen NEC’s business foundation in the digital transformation and social infrastructure domains by transferring operations to NEC Networks & System Integration Corporation. The reorganization is part of NEC’s broader plan to streamline its operations and enhance its market positioning in domestic regions.
The most recent analyst rating on (JP:6701) stock is a Sell with a Yen3500.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.
NEC Corp Reports Strong Q1 2025 Financial Performance
Jul 30, 2025
NEC Corporation, a prominent player in the technology sector, specializes in providing IT and network solutions, with a focus on integrating advanced technologies to enhance social infrastructure and business operations.
NEC Corporation Reports Strong Financial Recovery in Q2 2025
Jul 29, 2025
NEC Corporation reported a significant improvement in its financial performance for the three-month period ending June 30, 2025, with a notable increase in revenue and operating profit compared to the previous year. The company’s strategic initiatives, including a share split, have positively impacted its financial stability and market positioning, reflecting a strong recovery and growth trajectory.
The most recent analyst rating on (JP:6701) stock is a Sell with a Yen2340.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.